Reassignment of Schedules at Newark-Liberty International Airport, 52285-52289 [2021-20399]

Download as PDF Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices but not necessarily affiliated with one of the aforementioned industries or sectors. All voting members of the Committee serve in a representative capacity on behalf of their respective industry or stakeholder group. The Board Members are ex officio (nonvoting) members of RETAC. Representatives from the U.S. Departments of Agriculture, Energy, and Transportation, and the Federal Energy Regulatory Commission may be invited to serve on the Committee in an advisory capacity as ex officio (nonvoting) members. RETAC meets at least twice a year, and meetings are open to the public, consistent with the Government in the Sunshine Act, Public Law 94–409 (1976). Further information about RETAC is available on the Board’s website (https://prod.stb.gov/resources/ stakeholder-committees/retac/) and at the General Services Administration’s FACA database (https:// facadatabase.gov/). Decided: September 14, 2021. By the Board, Scott M. Zimmerman, Acting Director, Office of Proceedings. Aretha Laws-Byrum, Clearance Clerk. [FR Doc. 2021–20188 Filed 9–17–21; 8:45 am] BILLING CODE 4915–01–P SURFACE TRANSPORTATION BOARD [Docket No. EP 519 (Sub-No. 5)] advisory body and complies with the provisions of the Federal Advisory Committee Act (FACA), 5 U.S.C. app., and its implementing regulations. The NGCC consists of approximately 42 members, excluding the governmental representatives. The membership comprises a balanced representation of individuals knowledgeable in the transportation of grain, including no fewer than 14 members from the Class I railroads (one marketing and one car management representative from each Class I), seven representatives from Class II and III carriers, 14 representatives from grain shippers and receivers, and seven representatives from private car owners and car manufacturers. The members of the Board are ex officio (non-voting) members of the NGCC, and the Vice Chairman of the Board is designated as Co-Chairman of the NGCC. The NGCC meets at least annually, and meetings are open to the public, consistent with the Government in the Sunshine Act, Pub. L. 94–409 (1976). Further information about the NGCC is available on the Board’s website (https://prod.stb.gov/resources/ stakeholder-committees/grain-carcouncil/) and at the General Services Administration’s FACA database (https://facadatabase.gov/). Decided: September 14, 2021. By the Board, Scott M. Zimmerman, Acting Director, Office of Proceedings. Regena Smith-Bernard, Clearance Clerk. Renewal of National Grain Car Council [FR Doc. 2021–20250 Filed 9–17–21; 8:45 am] Surface Transportation Board. ACTION: Notice of intent to renew charter. BILLING CODE 4915–01–P AGENCY: In accordance with the Federal Advisory Committee Act, notice is hereby given that the Surface Transportation Board (Board) intends to renew the charter of the National Grain Car Council (NGCC). ADDRESSES: A copy of the charter is available on the Board’s website at https://prod.stb.gov/resources/ stakeholder-committees/grain-carcouncil/. FOR FURTHER INFORMATION CONTACT: Alan Cassiday, Designated Federal Officer, at (202) 245–0308. Assistance for the hearing impaired is available through the Federal Relay Service at (800) 877–8339. SUPPLEMENTARY INFORMATION: The NGCC functions as a continuing working group to facilitate private-sector solutions and recommendations to the Board on matters affecting grain transportation. The NGCC functions solely as an SUMMARY: VerDate Sep<11>2014 16:49 Sep 17, 2021 Jkt 253001 TENNESSEE VALLEY AUTHORITY 52285 contact below know at least a week in advance. FOR FURTHER INFORMATION CONTACT: Cathy Coffey, ccoffey@tva.gov or 865– 632–4494. SUPPLEMENTARY INFORMATION: The RRSC was established to advise TVA on its natural resource and stewardship activities, and the priorities among competing objectives and values. Notice of this meeting is given under the Federal Advisory Committee Act (FACA), 5 U.S.C. App.2. The meeting agenda includes the following: 1. Welcome and Introductions 2. Presentation Regarding TVA’s Proposed Biodiversity Policy 3. Seek advice from RRSC on Biodiversity Policy 4. Update on Natural Resource projects 5. Public Comment period A 30-minute public comment session will be held at 9:30 a.m. EDT. If you wish to speak, please send the email request to ccoffey@tva.gov by 5 p.m. on September 21. Written comments also are invited. Written comments must be emailed to ccoffey@tva.gov no later than 5 p.m. on September 20, 2021, so they may be shared with the RRSC prior to the meeting. Dated: September 7, 2021. The DFO of the Tennessee Valley Authority and Vice President of External Strategy & Regulatory Affairs, Melanie Farrell, having reviewed and approved this document, is delegating the authority to sign this document to Cathy Coffey, Senior Program Manager of Stakeholder Relations, for purposes of publication in the Federal Register. Cathy Coffey, Senior Program Manager, Stakeholder Relations, Tennessee Valley Authority. [FR Doc. 2021–20259 Filed 9–17–21; 8:45 am] Meeting of the Regional Resource Stewardship Council BILLING CODE 8120–08–P Tennessee Valley Authority (TVA). ACTION: Notice of meeting. DEPARTMENT OF TRANSPORTATION The TVA Regional Resource Stewardship Council (RRSC) will hold a virtual meeting on Wednesday, September 22, 2021, to learn about proposed Biodiversity policy and hear updates on multiple subjects. DATES: The meeting will be held on Wednesday, September 22, 2021 from 9:00 a.m. to 2:00 p.m. EDT. ADDRESSES: The meeting is virtual and open to the public. Members of the public must preregister at the following link: https://bit.ly/RRSC-Sept by 5 p.m. September 20, 2021. Anyone needing special accommodations should let the Office of the Secretary AGENCY: SUMMARY: PO 00000 Frm 00163 Fmt 4703 Sfmt 4703 Federal Aviation Administration [Docket No. DOT–OST–2021–0103] Reassignment of Schedules at NewarkLiberty International Airport Office of the Secretary of Transportation (OST) and Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Notice of proposed reassignment of schedules at Newark Liberty International Airport. AGENCY: By this notice, the U.S. Department of Transportation SUMMARY: E:\FR\FM\20SEN1.SGM 20SEN1 52286 Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices (Department or DOT), including the Federal Aviation Administration (FAA), provides notice of its intention to approve schedule plans, for a single low-cost carrier (LCC) or ultra-low-cost carrier (ULCC), to operate the 16 peak afternoon and evening runway timings previously approved for operation by Southwest Airlines, Inc. (Southwest) at Newark-Liberty International Airport (EWR or Newark). The Department is seeking comment on the proposed process as well as the proposed eligibility and evaluation criteria described below. Comments are due no later than September 27, 2021. DATES: Submit comments on or before September 27, 2021. ADDRESSES: Submit comments to docket DOT–OST–2021–0103. FOR FURTHER INFORMATION CONTACT: Todd Homan, Director, Office of Aviation Analysis, 1200 New Jersey Avenue SE, Washington, DC 20590 or (202) 366–5903; or Al Meilus, Manager, Slot Administration, AJR–G, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591; telephone (202) 267–2822; email Al.Meilus@faa.gov. SUPPLEMENTARY INFORMATION: This notice and the actions the Department is proposing are in response to the Court of Appeals for the D.C. Circuit’s decision in Spirit Airlines v. DOT, et al., and in furtherance of the whole of government approach to competition embodied in the President’s Executive Order 14036.1 Background In 2010, United Airlines, Inc. (United) and Continental Airlines, Inc. (Continental) announced plans to merge. In response to concerns raised by the Department of Justice (DOJ) over the transaction and its potential anticompetitive effects, particularly where Continental was the dominant carrier, United agreed to transfer 36 of its take-off and landing rights (operating authorizations or slots) at EWR to Southwest Airlines, Inc. (Southwest). DOJ found that, ‘‘[t]he transfer of slots and other assets at Newark to Southwest, a low cost carrier that currently has only limited service in the New York metropolitan area and no Newark service, resolves the department’s principal competition concerns and will likely significantly benefit consumers on overlap routes as 1 See Executive Order issued July 9, 2021, available at https://www.whitehouse.gov/briefingroom/statements-releases/2021/07/09/fact-sheetexecutive-order-on-promoting-competition-in-theamerican-economy/. VerDate Sep<11>2014 16:49 Sep 17, 2021 Jkt 253001 well as on many other routes.’’ 2 United and Continental carried out their merger and the post-merger United became the dominant carrier at EWR. At the time of the merger, EWR was an FAA-designated Level 3 (slotcoordinated) airport, meaning that, in order to perform a take-off or landing during most hours, an air carrier needed an FAA-allocated slot for the time of the operation. Under then-applicable rules, carriers that held slots could trade or lease them to other carriers.3 In 2016, as the result of improved operational metrics, FAA re-designated EWR a Level 2 (schedule facilitated) airport.4 Under Level 2, slots are not allocated. Rather, carriers submit schedule requests for the upcoming season to FAA, and FAA works cooperatively with carriers to seek voluntary schedule adjustments from carriers to alleviate delays and other operational issues. Once agreed upon, FAA approves each carrier’s schedule. Under Level 2, carriers generally retain schedule priority based on actual operations conducted as approved in the previous corresponding season, but such schedule approvals are not transferrable like slots (i.e., carriers cannot trade or lease their approved schedules to other carriers). On July 25, 2019, Southwest announced that it would cease operations at EWR effective November 3, 2019.5 As Southwest could not lease its approved runway timings to another carrier under Level 2 rules, upon its cessation of service, Southwest’s approved runway timings reverted to FAA. Sixteen of these operations were in peak afternoon and evening hours (specifically, the period from 14:00– 21:59 Eastern Time) at EWR when schedule approvals were generally not otherwise available. These operations were also in hours when approved schedules were generally at or above the 79/hour operational cap imposed by FAA, on average and considering offsets in adjacent periods. In an effort to improve performance at EWR, FAA 2 ‘‘United Airlines and Continental Airlines Transfer Assets to Southwest Airlines in Response to Department of Justice’s Antitrust Concerns’’, United States Department of Justice Press Release, August 27, 2010, https://www.justice.gov/opa/pr/ united-airlines-and-continental-airlines-transferassets-southwest-airlines-response. 3 See Operating Limitations at Newark Liberty International Airport, 74 FR 51648 (Oct. 7, 2009). 4 See ‘‘Change of Newark Liberty International Airport (EWR) Designation’’, 81 FR 19861, April 6, 2016. 5 ‘‘Southwest Reports Record Second Quarter Revenues And Earnings Per Share’’, Southwest Airlines Press Release, July 25, 2019, https:// www.swamedia.com/releases/release424146113c6f2a2eebe84fb61d59a4ff-southwestreports-record-second-quarter-revenues-andearnings-per-share?query=newark. PO 00000 Frm 00164 Fmt 4703 Sfmt 4703 lowered the scheduling limit effective with the summer 2018 season that commenced in March 2018.6 Following this change, FAA approved flights above the 79/hour limit only if operated in the previous corresponding season by the same carrier and dating back to the higher limit. In a letter dated August 12, 2019, the Assistant Attorney General for the Antitrust Division stated that, ‘‘[Southwest’s] decision implicates the relief we negotiated with United Airlines as a condition of its merger with Continental in 2010. We are therefore committed to working with the DOT and FAA to evaluate how best to reallocate Southwest’s capacity at the airport in a manner consistent with our enforcement decision in that matter.’’ The letter goes on to state: Those divestitures indeed facilitated important competition at the airport. Southwest used the slots to introduce new low-fare competition to United on multiple routes resulting in substantially lowered fares and increased service . . . Given that United already holds approximately 66% of authorizations at Newark, and that competition for United is already in short supply at the airport (e.g., 81 of 148 routes at the airport are monopoly routes operated by United), we believe the DOT and FAA should seek to resolve the reallocation issue in a way that preserves competition at the airport. To do otherwise would undermine the goal of the remedy the DOJ negotiated with United as a condition of its merger with Continental. On October 2, 2019, as part of a routine scheduling notice, FAA announced that it would not replace or ‘‘backfill’’ all of Southwest’s operations in the EWR schedule to the extent such operations exceeded the scheduling limits for purposes of the summer 2020 scheduling season.7 However, FAA also stated that it planned to assess the impacts of the peak period Southwest reductions and other schedule changes at EWR on performance, as well as the impacts on competition in close coordination with the Office of the Secretary of Transportation, in the upcoming Winter 2019/2020 and Summer 2020 scheduling seasons.8 6 See Notice of Submission Deadline for the Summer 2018 Scheduling Season, 82 FR 45938 (Oct. 2, 2017). The winter season limits were already at 79 per hour based on winter season capacity analyses. See also Notice of Submission Deadline for the Winter 2018 Scheduling Season, 83 FR 21335 (May 9, 2018). The FAA had also previously targeted a scheduling limit of 79 operations per hour in the initial transition from Level 3 slot controls to Level 2 schedule facilitation at EWR. 7 See ‘‘Submission Deadline for Schedule Information for Newark Liberty International Airport for the Summer 2020 Scheduling Season’’, 84 FR 52580, October 2, 2019, at 52582. 8 Ibid. E:\FR\FM\20SEN1.SGM 20SEN1 Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices Ultimately, for the 36 slots that were the subject of the 2010 United/Continental divestiture, FAA reallocated 20 of Southwest’s operations, but did not ‘‘backfill’’ 16 peak-hour operations. Spirit Airlines sought review by the U.S. Court of Appeals for the D.C. Circuit, challenging FAA’s decision not to backfill the 16 peak-hour operations, claiming that FAA’s decision was arbitrary and capricious because FAA failed to consider the effect of its decision on competition and did not explain why it could not use a less burdensome tool (such as a schedule reduction meeting under 49 U.S.C. 41722), and lacked substantial evidence for its decision. On May 21, 2021, the D.C. Circuit vacated FAA’s decision and remanded the matter to the agency to address the issue of competition.9 In doing so, the D.C. Circuit stated that ‘‘the agency . . . ignored information about the competitive situation at Newark’’ and that the ‘‘record provides precious little insight into whether or how the FAA approached the competition problem.’’ 10 The D.C. Circuit also highlighted the fact that the agency did not discuss ‘‘why it prefers miniscule reductions in delay more than competition that could lower fares for passengers.’’ 11 Finally, the Court cautioned that ‘‘[i]f the FAA again decides to retire Southwest’s peakperiod slots, it should be prepared to provide a reasoned explanation for preferring to cut travel time an average of one minute rather than to cut the price of flying by as much as 45 percent on routes that would gain a second carrier.’’ 12 Demand and Congestion at EWR Consistent with the delay modeling results included in the administrative record in Spirit Airlines v. DOT, et al. (D.C. Cir. 19–1248), with demand at prepandemic levels, FAA estimates that ‘‘backfilling’’ the 16 runway timings previously held by Southwest in peak afternoon and evening periods would increase delay at EWR by 5.9%, or by an average of 1.2 minutes per operation throughout the day. However, since the 16 runway timings are all in the peak afternoon and evening period; the added delay would be concentrated in these hours. EWR and LaGuardia Airport (LGA) are the two most delayed airports in the National Airspace System (NAS) as reported through Aviation System 9 Spirit Airlines Inc. v. DOT et al., 997 F.3d 1247, 1255 (D.C. Cir. 2021). 10 Id. at 1256. 11 Id. 12 Id. at 1257. VerDate Sep<11>2014 16:49 Sep 17, 2021 Jkt 253001 Performance Metrics (ASPM) delays compared to scheduled gate departures/ arrivals. Congestion at EWR should be considered in context against the other NYC area airports as well as Philadelphia International Airport (PHL), airports within similar operational and passenger catchment areas.13 Compared to LGA, EWR has a slightly higher completion rate,14 but also a higher rate of delayed operations. In fiscal year (FY) 2019, EWR’s completion rate (97.0%) was lower than the NAS average, but similar to the completion rate at LGA (96.8%) and PHL (97.4%). Also in FY 2019, EWR’s rate of delayed flights was 29.4% compared to schedule for gate departures and gate arrivals, which is higher than LGA (26.1%), John F. Kennedy International Airport (22.5%), and PHL (20.4%).15 The FAA made significant progress smoothing and balancing the schedule at EWR under the Level 2 construct just prior to the COVID–19 pandemic. The sudden, drastic disruption caused by COVID–19 affects the analysis and relevant long-term effects of operational, performance, and demand-related changes at EWR, including those changes resulting from Southwest leaving the airport. Access to EWR and the New York City area generally remains coveted, and schedule requests for flights at EWR have exceeded the desired scheduling limits in multiple hours. While the FAA would accommodate the reassignment of the 16 peak afternoon and evening operations as proposed in this notice, the FAA would continue to seek voluntary cooperation from all carriers to adjust schedules at EWR in an effort to manage the operation within the desired scheduling limits. FAA notes that the COVID–19 public health emergency has created uncertainty about the ultimate recovery of demand back to pre-COVID levels or the potential for a ‘‘new normal’’ in demand levels at EWR as the public’s 13 An airport’s catchment area is the geographic area from which your airport can reasonably expect to draw commercial air service passengers. See ‘‘Defining Your Airport’s Catchment Area’’ available at: https://crp.trb.org/acrpwebresource1/ defining-your-airports-catchment-area/. 14 Completion Rate refers to the percentage of scheduled and/or planned air carrier arrivals that were not cancelled. Calculated as Metric Arrivals/ (Metric Arrivals + Cancelled Arrivals). Cancelled Arrivals are determined next day using air carrier flight plan cancellation messages and scheduled flights not flown. Airline Service Quality Performance (ASQP) cancellation data are used when available. See ‘‘ASPM Cancellations: Definitions of Variables’’ available at: https:// aspm.faa.gov/aspmhelp/index/ASPM_ CancellationsDefinitions_of_Variables.html. 15 See docket for ASPM data. PO 00000 Frm 00165 Fmt 4703 Sfmt 4703 52287 travel patterns have, and continue, to evolve, and carriers restructure their networks to accommodate this dynamic. Given this evolving situation, FAA will continue to monitor performance at EWR and review its capacity evaluation and targeted scheduling limits at EWR in the future. However, at the current time, the desired hourly scheduling limit at EWR remains at 79 operations per hour and 43 operations per halfhour.16 Based on historical demand and an increase in operations in ‘‘shoulder’’ periods adjacent to the busiest hours before the COVID–19 public health emergency, most hours are now at the desired hourly scheduling limits. To help with a balance between arrivals and departures, the desired maximum number of scheduled arrivals or departures, respectively, is 43 in an hour and 24 in a half-hour. This would allow some higher levels of operations in certain periods (not to exceed the hourly limits) and some recovery from lower demand in adjacent periods. FAA will seek to work in coordination with the awarded carrier to adjust schedules within the peak afternoon and evening period, including minor changes between adjacent half hours, in the interest of optimizing efficiency and accommodating the carrier’s schedule plans, consistent with the usual Level 2 process. Proposed Reassignment As stated above, FAA estimates that, in a pre-COVID–19 environment, reassigning the 16 peak-hour operations would result in additional delays, for all EWR operations, of approximately 1.2 minutes per operation throughout the day. United, by far the largest carrier at EWR by several measures, operates many routes on a monopoly basis. The Department has previously found that introducing LCC services in competition on monopoly routes significantly reduces fares on those routes.17 One study found that the presence of LCCs and ULCCs causes a decrease in average one-way fares of between $15–$36.18 Absent introduction of these LCC services, it is highly unlikely that there will be any significant reduction in fares. These potential savings to 16 See 86 FR 24448 (May 6, 2021). ‘‘U.S. DOT/FAA—Notice of a Petition for Waiver and Solicitation of Comments on Grant of Petition with Conditions’’, FAA–2010–0109–0097, Jul. 21, 2011, at 33–34. 18 Wittman, Michael D.; Swelbar, William S. (August 2013). Evolving Trends of U.S. Domestic Airfares: The Impacts of Competition, Consolidation, and Low-Cost Carriers at 20; see also Bennett, Randall D.; Craun, James M. (May 1993). The Airline Deregulation Evolution Continues: The Southwest Effect. Office of Aviation Analysis, U.S. Department of Transportation. 17 See E:\FR\FM\20SEN1.SGM 20SEN1 52288 Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices consumers are important objectives of the President’s Executive Order on competition, particularly in a concentrated market. There are many benefits of competition, including lower fares, more throughput, higher utilization of scarce assets, more opportunities to develop flexible or common use airport facilities, and reduced opportunities for exclusionary behavior such as ‘‘babysitting.’’ That will not change unless we introduce the LCC services and at the same time, seek necessary adjustments by incumbent carriers to mitigate the potential delays. The Department believes that the benefits of lower fares significantly outweigh the impacts of additional delays. Given the court’s decision, ongoing competition issues at EWR, and Executive Order 14036, the Department believes that it is necessary to reintroduce the competition that was previously provided by Southwest at EWR even though this will increase delays at EWR. Pursuant to the Department and FAA’s authority under 49 U.S.C. 40101, 40103, and 41712, the Department is initiating a proceeding to reassign the 16 peak-hour runway timings at issue. The Department believes that reassigning these schedule plans to operate in the 16-peak hour runway timings, in a manner that would continue to satisfy DOJ’s competition remedy related to the United/ Continental merger, and as quickly as possible, best satisfies the public interest and addresses the concerns of the D.C. Circuit. This action is not a routine approval of schedule plans that would typically be handled under FAA’s standard schedule facilitation procedures. The Department notes that this proceeding arises out of an unusual circumstance, where Southwest stopped operating at EWR, thus returning a large number of operations that Southwest acquired as a condition of the United-Continental merger. Thus, the Department is treating this matter as the reassignment and continuation of the DOJ-approved competition remedy to the UnitedContinental merger. As such, the Department proposes to evaluate proposals from eligible carriers that can effectively carry out the goals of that competition remedy, namely to provide price and service competition to United, the dominant hub carrier at EWR, and for FAA to approve the peak-hour schedule plans of the carrier chosen based on that evaluation. In order to maintain the effect of the 2010 competition remedy, the Department has tentatively concluded that the schedule plans to operate in the 16 VerDate Sep<11>2014 16:49 Sep 17, 2021 Jkt 253001 peak-hour runway timings should be approved as a package to a single carrier able to provide the type and magnitude of competitive discipline at EWR contemplated by the DOJ remedy. Previously, DOJ found that the divestiture to Southwest of 36 slots at Newark (i.e., United’s pre- merger holdings), including the 16 peak afternoon and evening period slots at issue in this notice, resolved its competition concerns with the transaction. By divesting all of the slots to a single carrier with a proven track record and the capability to provide a competitive pattern of frequent service in markets operated by UnitedContinental, DOJ was able to minimize the number of slots divested while maximizing the competitive impact of the remedy. Based upon current competitive conditions, the Department finds that, in order to provide price discipline for the services of a hub carrier in particular, the LCC or ULCC approved to operate in the 16 peak-hour runway timings needs to have a sufficient pattern of service to achieve economies of scale in its operations at the airport consistent with its low-cost or low-fare business model, to protect itself from potential anticompetitive behavior from the dominant carrier(s), and to have sufficient incentive and ability to compete head to head with dominant carriers.19 Furthermore, we have previously found that a single carrier offering a broader competitive alternative to the hub carrier’s customer proposition at the airport can extend the benefits of the low-fare service even in markets without LCC or ULCC services by changing passengers’ perception of what a fair price is for a particular itinerary.20 When fares are substantially higher, customers tend to look for cheaper alternatives at other airlines or nearby airports to avoid paying ‘‘above market’’ prices. This ‘‘halo effect’’ tends to discipline high fares charged by the 19 ‘‘Restricting eligibility to these . . . carriers would assist new or small non-aligned carriers in defending themselves against increasingly dominant competitors, which, with the benefit of additional slot interests, could pursue anticompetitive strategies such as significantly increasing existing services in any new entrant/ limited incumbent/low-cost/non-aligned carrier market.’’ Petition for Waiver of the Terms of the Order Limiting Scheduled Operations at LaGuardia Airport, 75 FR 7306, February 18, 2010 at 7310. 20 See Bennett, Randall D.; Craun, James M. (May 1993). The Airline Deregulation Evolution Continues: The Southwest Effect. Office of Aviation Analysis, U.S. Department of Transportation; and Wittman, Michael D.; Swelbar, William S. (August 2013). Evolving Trends of U.S. Domestic Airfares: The Impacts of Competition, Consolidation, and Low-Cost Carriers. PO 00000 Frm 00166 Fmt 4703 Sfmt 4703 incumbent even in markets where the LCC does not operate, at the margin. For these reasons, the Department proposes to approve, as a package to an eligible LCC or ULCC, schedule plans to operate in the 16 peak-hour runway timings previously approved for operation by Southwest. The Department seeks to finalize this process to enable a carrier to begin operations as soon as possible, as early as the start of the Winter 2021/2022 scheduling season. To determine eligibility, the Department is proposing several criteria, described below. While approving an LCC or ULCC’s schedule plans to operate in these 16 peak-hour runway timings is necessary to address ongoing competition issues at EWR, the Department is not concluding by virtue of this process that such action will be sufficient to resolve all of those issues. In addition, the Department notes that, aside from this proceeding to reassign 16 operations historically approved for operation by Southwest, usual policies and procedures for Level 2 schedule facilitation at EWR continue to apply.21 The FAA intends to provide responses to all pending schedule requests for the Winter 2021/2022 scheduling season as soon as possible following issuance of this notice. Once this reassignment proceeding has been completed, the FAA will take action to approve the 16 additional operations for the benefit of the awarded carrier. Eligibility and Evaluation Criteria In airline transactions involving constrained markets, where market concentration is at issue, the Department has found that LCCs and ULCCs have the greatest competitive impact upon entry by their ability to dramatically lower fares and increase the volume of passengers in a market.22 In the 2010 United/Continental divestiture, DOJ was satisfied that its competition concerns had been addressed by the transfer to Southwest, a LCC, of United’s EWR slots and other assets. Given competitive conditions at Newark—including United’s ongoing dominance at EWR and the relatively small number of operating authorizations being reassigned—the Department tentatively believes that continuing to limit eligibility to LCC or ULCC carriers would best serve the public interest by providing the 21 See e.g., Notice of Submission Deadline for Winter 2021/2022 Scheduling Season, 86 FR 24428 (May 6, 2021). 22 See ‘‘Petition for Waiver of the Terms of the Order Limiting Scheduled Operations at LaGuardia Airport’’, 76 FR 63702, October 13, 2011 at 63705, and, Order 2016–11–2 at 21. E:\FR\FM\20SEN1.SGM 20SEN1 Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices maximum level of competition with the available public assets. In determining which LCC or ULCC would provide the maximum competition, the Department tentatively proposes to consider, among other factors, carriers’ business model and track record to ensure that they have the ability and stamina to provide the level of competition required. The business model and track record will be determined by analysis of revenue, traffic, and schedule data. More specifically, the Department will consider: • Business model and product offering that allow the carrier to effectively compete, including the extent to which offering low fares to large numbers of travelers is core to its business proposition across markets; • Record of entering and effectively competing in markets like those served by dominant carrier(s) at Newark; • Staying power and track record in highly competitive markets, especially vis-a`-vis the specific hub carrier and at network carrier hubs and focus cities where the competitive responses from incumbent airlines to new entry by price competitors may be particularly aggressive; and • Ability to appeal to a broad cross section of passengers by offering a competitive schedule with (at least) minimum levels of daily and weekly frequency appropriate for the market(s) at issue, along with reasonably competitive onboard products and services and the ability to deliver them to customers consistently over time. The Department tentatively proposes to evaluate eligible carriers based on the above criteria. Comments Requested The Department requests comments on various aspects of the proposed process outlined in this notice. Specifically, the Department seeks comments on its tentative decision to approve schedule plans, for a single carrier, to operate in the 16 peak-hour runway timings as soon as possible; its tentative decision to limit eligibility to LCC and ULCC carriers; and its proposed evaluation criteria. The Department will consider comments outside of the scope of this request as nonresponsive. Comments must be filed in this docket and are due not later than September 27, 2021. Since the issuance of the D.C. Circuit’s decision, the Department has received letters from interested stakeholders. Any correspondence related to the specific issues discussed in this notice have been included in the docket. VerDate Sep<11>2014 16:49 Sep 17, 2021 Jkt 253001 The Department will consider all responsive comments received and issue a further notice finalizing its decision and soliciting proposals from eligible carriers. If no responsive comments are received, the Department may proceed directly to issuing a notice requesting proposals and providing instruction for doing so.23 Issued in Washington, DC, on September 16, 2021. Carol Annette Petsonk, Deputy Assistant Secretary for Aviation and International Affairs, U.S. Department of Transportation. Virginia T. Boyle, Vice President, System Operations Services, Federal Aviation Administration. [FR Doc. 2021–20399 Filed 9–16–21; 4:15 pm] BILLING CODE 4910–9X–P DEPARTMENT OF TRANSPORTATION Federal Highway Administration Notice of Final State Agency Actions Under 23 U.S.C. 327 on I–17, Anthem Way to Jct. SR 69 in Maricopa County and Yavapai County, AZ Federal Highway Administration (FHWA), Department of Transportation (DOT). ACTION: Notice. AGENCY: The FHWA, on behalf of the Arizona Department of Transportation (ADOT), is issuing this notice to announce actions taken by ADOT and other relevant Federal agencies that are final. The actions relate to the Categorical Exclusion (CE) d-list action for—Other qualified project individually documented and approved under paragraph (d)—for the proposed project I–17, Anthem Way to Jct. SR 69 in Maricopa and Yavapai County, AZ. The actions grant licenses, permits, and approvals for the project. DATES: By this notice, FHWA, on behalf of ADOT, is advising the public of final agency actions subject to 23 U.S.C. 139(l)(1). A claim seeking judicial review of the Federal agency actions with authority on the highway project will be barred unless the claim is filed on or before February 17, 2022. If the Federal law that authorizes judicial review of a claim provides a time period of less than 150 days for filing such claim, then that shorter time period still applies. FOR FURTHER INFORMATION CONTACT: Mr. Steven Olmsted, NEPA Assignment SUMMARY: 23 The Department will solicit proposals on a confidential basis given the sensitive commercial information that they are likely to contain. PO 00000 Frm 00167 Fmt 4703 Sfmt 4703 52289 Manager, Environment Planning, Arizona Department of Transportation, 205 S 17th Avenue, MD EM02, Phoenix, Arizona 85007; telephone: (480) 202– 6050, email: solmsted@azdot.gov. The Arizona Department of Transportation normal business hours are 8:00 a.m. to 4:30 p.m. (Mountain Standard Time). You may also contact: Mr. Paul O’Brien, Environmental Planning Administrator, Arizona Department of Transportation, 205 S 17th Avenue, MD EM02, Phoenix, Arizona 85007; telephone: (480) 356–2893, email: POBrien@azdot.gov. SUPPLEMENTARY INFORMATION: Effective April 16, 2019, the FHWA assigned and ADOT assumed environmental responsibilities for this project pursuant to 23 U.S.C. 327 and a Memorandum of Understanding executed by FHWA and ADOT. Notice is hereby given that ADOT and other relevant Federal agencies have taken final agency actions by issuing licenses, permits, and approvals for the following project in the State of Arizona: I–17, Anthem Way to Jct. SR 69 in Maricopa and Yavapai County, AZ. The actions by ADOT and other relevant Federal agencies and the laws under which such actions were taken, are described in the CE d-list action for— Other qualified project individually documented and approved under paragraph (d)—approved on May 26, 2021, and in other documents in the administrative record. The CE and other project records are available by contacting ADOT at the addresses provided above. Project information is also available online at: https:// azdot.gov/projects/central-districtprojects/i-17-widening-andimprovement-project-anthem-waysunset-point. This notice applies to all ADOT and other relevant Federal agency decisions as of the issuance date of this notice and all laws under which such actions were taken, including but not limited to: 1. General: National Environmental Policy Act (NEPA) [42 U.S.C. 4321– 4351]; Federal-Aid Highway Act [23 U.S.C. 109]. 2. Air: Clean Air Act [42 U.S.C. 7401– 7671(q)]. 3. Land: Section 4(f) of the U.S. Department of Transportation Act of 1966 [49 U.S.C. 303]; Landscaping and Scenic Enhancement (Wildflowers) [23 U.S.C. 319]. 4. Wildlife: Endangered Species Act [16 U.S.C. 1531–1544 and Section 1536], Marine Mammal Protection Act [16 U.S.C. 1361], Fish and Wildlife Coordination Act [16 U.S.C. 661– 667(d)], Migratory Bird Treaty Act [16 U.S.C. 703–712]. E:\FR\FM\20SEN1.SGM 20SEN1

Agencies

[Federal Register Volume 86, Number 179 (Monday, September 20, 2021)]
[Notices]
[Pages 52285-52289]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-20399]


=======================================================================
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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

Office of the Secretary

[Docket No. DOT-OST-2021-0103]


Reassignment of Schedules at Newark-Liberty International Airport

AGENCY: Office of the Secretary of Transportation (OST) and Federal 
Aviation Administration (FAA), Department of Transportation (DOT).

ACTION: Notice of proposed reassignment of schedules at Newark Liberty 
International Airport.

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SUMMARY: By this notice, the U.S. Department of Transportation

[[Page 52286]]

(Department or DOT), including the Federal Aviation Administration 
(FAA), provides notice of its intention to approve schedule plans, for 
a single low-cost carrier (LCC) or ultra-low-cost carrier (ULCC), to 
operate the 16 peak afternoon and evening runway timings previously 
approved for operation by Southwest Airlines, Inc. (Southwest) at 
Newark-Liberty International Airport (EWR or Newark). The Department is 
seeking comment on the proposed process as well as the proposed 
eligibility and evaluation criteria described below. Comments are due 
no later than September 27, 2021.

DATES: Submit comments on or before September 27, 2021.

ADDRESSES: Submit comments to docket DOT-OST-2021-0103.

FOR FURTHER INFORMATION CONTACT: Todd Homan, Director, Office of 
Aviation Analysis, 1200 New Jersey Avenue SE, Washington, DC 20590 or 
(202) 366-5903; or Al Meilus, Manager, Slot Administration, AJR-G, 
Federal Aviation Administration, 800 Independence Avenue SW, 
Washington, DC 20591; telephone (202) 267-2822; email 
[email protected].

SUPPLEMENTARY INFORMATION: This notice and the actions the Department 
is proposing are in response to the Court of Appeals for the D.C. 
Circuit's decision in Spirit Airlines v. DOT, et al., and in 
furtherance of the whole of government approach to competition embodied 
in the President's Executive Order 14036.\1\
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    \1\ See Executive Order issued July 9, 2021, available at 
https://www.whitehouse.gov/briefing-room/statements-releases/2021/07/09/fact-sheet-executive-order-on-promoting-competition-in-the-american-economy/.
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Background

    In 2010, United Airlines, Inc. (United) and Continental Airlines, 
Inc. (Continental) announced plans to merge. In response to concerns 
raised by the Department of Justice (DOJ) over the transaction and its 
potential anticompetitive effects, particularly where Continental was 
the dominant carrier, United agreed to transfer 36 of its take-off and 
landing rights (operating authorizations or slots) at EWR to Southwest 
Airlines, Inc. (Southwest). DOJ found that, ``[t]he transfer of slots 
and other assets at Newark to Southwest, a low cost carrier that 
currently has only limited service in the New York metropolitan area 
and no Newark service, resolves the department's principal competition 
concerns and will likely significantly benefit consumers on overlap 
routes as well as on many other routes.'' \2\ United and Continental 
carried out their merger and the post-merger United became the dominant 
carrier at EWR.
---------------------------------------------------------------------------

    \2\ ``United Airlines and Continental Airlines Transfer Assets 
to Southwest Airlines in Response to Department of Justice's 
Antitrust Concerns'', United States Department of Justice Press 
Release, August 27, 2010, https://www.justice.gov/opa/pr/united-airlines-and-continental-airlines-transfer-assets-southwest-airlines-response.
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    At the time of the merger, EWR was an FAA-designated Level 3 (slot-
coordinated) airport, meaning that, in order to perform a take-off or 
landing during most hours, an air carrier needed an FAA-allocated slot 
for the time of the operation. Under then-applicable rules, carriers 
that held slots could trade or lease them to other carriers.\3\ In 
2016, as the result of improved operational metrics, FAA re-designated 
EWR a Level 2 (schedule facilitated) airport.\4\ Under Level 2, slots 
are not allocated. Rather, carriers submit schedule requests for the 
upcoming season to FAA, and FAA works cooperatively with carriers to 
seek voluntary schedule adjustments from carriers to alleviate delays 
and other operational issues. Once agreed upon, FAA approves each 
carrier's schedule. Under Level 2, carriers generally retain schedule 
priority based on actual operations conducted as approved in the 
previous corresponding season, but such schedule approvals are not 
transferrable like slots (i.e., carriers cannot trade or lease their 
approved schedules to other carriers).
---------------------------------------------------------------------------

    \3\ See Operating Limitations at Newark Liberty International 
Airport, 74 FR 51648 (Oct. 7, 2009).
    \4\ See ``Change of Newark Liberty International Airport (EWR) 
Designation'', 81 FR 19861, April 6, 2016.
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    On July 25, 2019, Southwest announced that it would cease 
operations at EWR effective November 3, 2019.\5\ As Southwest could not 
lease its approved runway timings to another carrier under Level 2 
rules, upon its cessation of service, Southwest's approved runway 
timings reverted to FAA. Sixteen of these operations were in peak 
afternoon and evening hours (specifically, the period from 14:00-21:59 
Eastern Time) at EWR when schedule approvals were generally not 
otherwise available. These operations were also in hours when approved 
schedules were generally at or above the 79/hour operational cap 
imposed by FAA, on average and considering offsets in adjacent periods. 
In an effort to improve performance at EWR, FAA lowered the scheduling 
limit effective with the summer 2018 season that commenced in March 
2018.\6\ Following this change, FAA approved flights above the 79/hour 
limit only if operated in the previous corresponding season by the same 
carrier and dating back to the higher limit.
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    \5\ ``Southwest Reports Record Second Quarter Revenues And 
Earnings Per Share'', Southwest Airlines Press Release, July 25, 
2019, https://www.swamedia.com/releases/release-424146113c6f2a2eebe84fb61d59a4ff-southwest-reports-record-second-quarter-revenues-and-earnings-per-share?query=newark.
    \6\ See Notice of Submission Deadline for the Summer 2018 
Scheduling Season, 82 FR 45938 (Oct. 2, 2017). The winter season 
limits were already at 79 per hour based on winter season capacity 
analyses. See also Notice of Submission Deadline for the Winter 2018 
Scheduling Season, 83 FR 21335 (May 9, 2018). The FAA had also 
previously targeted a scheduling limit of 79 operations per hour in 
the initial transition from Level 3 slot controls to Level 2 
schedule facilitation at EWR.
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    In a letter dated August 12, 2019, the Assistant Attorney General 
for the Antitrust Division stated that, ``[Southwest's] decision 
implicates the relief we negotiated with United Airlines as a condition 
of its merger with Continental in 2010. We are therefore committed to 
working with the DOT and FAA to evaluate how best to reallocate 
Southwest's capacity at the airport in a manner consistent with our 
enforcement decision in that matter.'' The letter goes on to state:

    Those divestitures indeed facilitated important competition at 
the airport. Southwest used the slots to introduce new low-fare 
competition to United on multiple routes resulting in substantially 
lowered fares and increased service . . . Given that United already 
holds approximately 66% of authorizations at Newark, and that 
competition for United is already in short supply at the airport 
(e.g., 81 of 148 routes at the airport are monopoly routes operated 
by United), we believe the DOT and FAA should seek to resolve the 
reallocation issue in a way that preserves competition at the 
airport. To do otherwise would undermine the goal of the remedy the 
DOJ negotiated with United as a condition of its merger with 
Continental.

    On October 2, 2019, as part of a routine scheduling notice, FAA 
announced that it would not replace or ``backfill'' all of Southwest's 
operations in the EWR schedule to the extent such operations exceeded 
the scheduling limits for purposes of the summer 2020 scheduling 
season.\7\ However, FAA also stated that it planned to assess the 
impacts of the peak period Southwest reductions and other schedule 
changes at EWR on performance, as well as the impacts on competition in 
close coordination with the Office of the Secretary of Transportation, 
in the upcoming Winter 2019/2020 and Summer 2020 scheduling seasons.\8\

[[Page 52287]]

Ultimately, for the 36 slots that were the subject of the 2010 United/
Continental divestiture, FAA reallocated 20 of Southwest's operations, 
but did not ``backfill'' 16 peak-hour operations.
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    \7\ See ``Submission Deadline for Schedule Information for 
Newark Liberty International Airport for the Summer 2020 Scheduling 
Season'', 84 FR 52580, October 2, 2019, at 52582.
    \8\ Ibid.
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    Spirit Airlines sought review by the U.S. Court of Appeals for the 
D.C. Circuit, challenging FAA's decision not to backfill the 16 peak-
hour operations, claiming that FAA's decision was arbitrary and 
capricious because FAA failed to consider the effect of its decision on 
competition and did not explain why it could not use a less burdensome 
tool (such as a schedule reduction meeting under 49 U.S.C. 41722), and 
lacked substantial evidence for its decision. On May 21, 2021, the D.C. 
Circuit vacated FAA's decision and remanded the matter to the agency to 
address the issue of competition.\9\ In doing so, the D.C. Circuit 
stated that ``the agency . . . ignored information about the 
competitive situation at Newark'' and that the ``record provides 
precious little insight into whether or how the FAA approached the 
competition problem.'' \10\ The D.C. Circuit also highlighted the fact 
that the agency did not discuss ``why it prefers miniscule reductions 
in delay more than competition that could lower fares for passengers.'' 
\11\ Finally, the Court cautioned that ``[i]f the FAA again decides to 
retire Southwest's peak-period slots, it should be prepared to provide 
a reasoned explanation for preferring to cut travel time an average of 
one minute rather than to cut the price of flying by as much as 45 
percent on routes that would gain a second carrier.'' \12\
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    \9\ Spirit Airlines Inc. v. DOT et al., 997 F.3d 1247, 1255 
(D.C. Cir. 2021).
    \10\ Id. at 1256.
    \11\ Id.
    \12\ Id. at 1257.
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Demand and Congestion at EWR

    Consistent with the delay modeling results included in the 
administrative record in Spirit Airlines v. DOT, et al. (D.C. Cir. 19-
1248), with demand at pre-pandemic levels, FAA estimates that 
``backfilling'' the 16 runway timings previously held by Southwest in 
peak afternoon and evening periods would increase delay at EWR by 5.9%, 
or by an average of 1.2 minutes per operation throughout the day. 
However, since the 16 runway timings are all in the peak afternoon and 
evening period; the added delay would be concentrated in these hours.
    EWR and LaGuardia Airport (LGA) are the two most delayed airports 
in the National Airspace System (NAS) as reported through Aviation 
System Performance Metrics (ASPM) delays compared to scheduled gate 
departures/arrivals. Congestion at EWR should be considered in context 
against the other NYC area airports as well as Philadelphia 
International Airport (PHL), airports within similar operational and 
passenger catchment areas.\13\ Compared to LGA, EWR has a slightly 
higher completion rate,\14\ but also a higher rate of delayed 
operations. In fiscal year (FY) 2019, EWR's completion rate (97.0%) was 
lower than the NAS average, but similar to the completion rate at LGA 
(96.8%) and PHL (97.4%). Also in FY 2019, EWR's rate of delayed flights 
was 29.4% compared to schedule for gate departures and gate arrivals, 
which is higher than LGA (26.1%), John F. Kennedy International Airport 
(22.5%), and PHL (20.4%).\15\
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    \13\ An airport's catchment area is the geographic area from 
which your airport can reasonably expect to draw commercial air 
service passengers. See ``Defining Your Airport's Catchment Area'' 
available at: https://crp.trb.org/acrpwebresource1/defining-your-airports-catchment-area/.
    \14\ Completion Rate refers to the percentage of scheduled and/
or planned air carrier arrivals that were not cancelled. Calculated 
as Metric Arrivals/(Metric Arrivals + Cancelled Arrivals). Cancelled 
Arrivals are determined next day using air carrier flight plan 
cancellation messages and scheduled flights not flown. Airline 
Service Quality Performance (ASQP) cancellation data are used when 
available. See ``ASPM Cancellations: Definitions of Variables'' 
available at: https://aspm.faa.gov/aspmhelp/index/ASPM_CancellationsDefinitions_of_Variables.html.
    \15\ See docket for ASPM data.
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    The FAA made significant progress smoothing and balancing the 
schedule at EWR under the Level 2 construct just prior to the COVID-19 
pandemic. The sudden, drastic disruption caused by COVID-19 affects the 
analysis and relevant long-term effects of operational, performance, 
and demand-related changes at EWR, including those changes resulting 
from Southwest leaving the airport. Access to EWR and the New York City 
area generally remains coveted, and schedule requests for flights at 
EWR have exceeded the desired scheduling limits in multiple hours. 
While the FAA would accommodate the reassignment of the 16 peak 
afternoon and evening operations as proposed in this notice, the FAA 
would continue to seek voluntary cooperation from all carriers to 
adjust schedules at EWR in an effort to manage the operation within the 
desired scheduling limits.
    FAA notes that the COVID-19 public health emergency has created 
uncertainty about the ultimate recovery of demand back to pre-COVID 
levels or the potential for a ``new normal'' in demand levels at EWR as 
the public's travel patterns have, and continue, to evolve, and 
carriers restructure their networks to accommodate this dynamic. Given 
this evolving situation, FAA will continue to monitor performance at 
EWR and review its capacity evaluation and targeted scheduling limits 
at EWR in the future. However, at the current time, the desired hourly 
scheduling limit at EWR remains at 79 operations per hour and 43 
operations per half-hour.\16\ Based on historical demand and an 
increase in operations in ``shoulder'' periods adjacent to the busiest 
hours before the COVID-19 public health emergency, most hours are now 
at the desired hourly scheduling limits. To help with a balance between 
arrivals and departures, the desired maximum number of scheduled 
arrivals or departures, respectively, is 43 in an hour and 24 in a 
half-hour. This would allow some higher levels of operations in certain 
periods (not to exceed the hourly limits) and some recovery from lower 
demand in adjacent periods. FAA will seek to work in coordination with 
the awarded carrier to adjust schedules within the peak afternoon and 
evening period, including minor changes between adjacent half hours, in 
the interest of optimizing efficiency and accommodating the carrier's 
schedule plans, consistent with the usual Level 2 process.
---------------------------------------------------------------------------

    \16\ See 86 FR 24448 (May 6, 2021).
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Proposed Reassignment

    As stated above, FAA estimates that, in a pre-COVID-19 environment, 
reassigning the 16 peak-hour operations would result in additional 
delays, for all EWR operations, of approximately 1.2 minutes per 
operation throughout the day. United, by far the largest carrier at EWR 
by several measures, operates many routes on a monopoly basis. The 
Department has previously found that introducing LCC services in 
competition on monopoly routes significantly reduces fares on those 
routes.\17\ One study found that the presence of LCCs and ULCCs causes 
a decrease in average one-way fares of between $15-$36.\18\ Absent 
introduction of these LCC services, it is highly unlikely that there 
will be any significant reduction in fares. These potential savings to

[[Page 52288]]

consumers are important objectives of the President's Executive Order 
on competition, particularly in a concentrated market. There are many 
benefits of competition, including lower fares, more throughput, higher 
utilization of scarce assets, more opportunities to develop flexible or 
common use airport facilities, and reduced opportunities for 
exclusionary behavior such as ``babysitting.'' That will not change 
unless we introduce the LCC services and at the same time, seek 
necessary adjustments by incumbent carriers to mitigate the potential 
delays. The Department believes that the benefits of lower fares 
significantly outweigh the impacts of additional delays.
---------------------------------------------------------------------------

    \17\ See ``U.S. DOT/FAA--Notice of a Petition for Waiver and 
Solicitation of Comments on Grant of Petition with Conditions'', 
FAA-2010-0109-0097, Jul. 21, 2011, at 33-34.
    \18\ Wittman, Michael D.; Swelbar, William S. (August 2013). 
Evolving Trends of U.S. Domestic Airfares: The Impacts of 
Competition, Consolidation, and Low-Cost Carriers at 20; see also 
Bennett, Randall D.; Craun, James M. (May 1993). The Airline 
Deregulation Evolution Continues: The Southwest Effect. Office of 
Aviation Analysis, U.S. Department of Transportation.
---------------------------------------------------------------------------

    Given the court's decision, ongoing competition issues at EWR, and 
Executive Order 14036, the Department believes that it is necessary to 
reintroduce the competition that was previously provided by Southwest 
at EWR even though this will increase delays at EWR. Pursuant to the 
Department and FAA's authority under 49 U.S.C. 40101, 40103, and 41712, 
the Department is initiating a proceeding to reassign the 16 peak-hour 
runway timings at issue. The Department believes that reassigning these 
schedule plans to operate in the 16-peak hour runway timings, in a 
manner that would continue to satisfy DOJ's competition remedy related 
to the United/Continental merger, and as quickly as possible, best 
satisfies the public interest and addresses the concerns of the D.C. 
Circuit.
    This action is not a routine approval of schedule plans that would 
typically be handled under FAA's standard schedule facilitation 
procedures. The Department notes that this proceeding arises out of an 
unusual circumstance, where Southwest stopped operating at EWR, thus 
returning a large number of operations that Southwest acquired as a 
condition of the United-Continental merger. Thus, the Department is 
treating this matter as the reassignment and continuation of the DOJ-
approved competition remedy to the United-Continental merger. As such, 
the Department proposes to evaluate proposals from eligible carriers 
that can effectively carry out the goals of that competition remedy, 
namely to provide price and service competition to United, the dominant 
hub carrier at EWR, and for FAA to approve the peak-hour schedule plans 
of the carrier chosen based on that evaluation. In order to maintain 
the effect of the 2010 competition remedy, the Department has 
tentatively concluded that the schedule plans to operate in the 16 
peak-hour runway timings should be approved as a package to a single 
carrier able to provide the type and magnitude of competitive 
discipline at EWR contemplated by the DOJ remedy.
    Previously, DOJ found that the divestiture to Southwest of 36 slots 
at Newark (i.e., United's pre- merger holdings), including the 16 peak 
afternoon and evening period slots at issue in this notice, resolved 
its competition concerns with the transaction. By divesting all of the 
slots to a single carrier with a proven track record and the capability 
to provide a competitive pattern of frequent service in markets 
operated by United-Continental, DOJ was able to minimize the number of 
slots divested while maximizing the competitive impact of the remedy.
    Based upon current competitive conditions, the Department finds 
that, in order to provide price discipline for the services of a hub 
carrier in particular, the LCC or ULCC approved to operate in the 16 
peak-hour runway timings needs to have a sufficient pattern of service 
to achieve economies of scale in its operations at the airport 
consistent with its low-cost or low-fare business model, to protect 
itself from potential anticompetitive behavior from the dominant 
carrier(s), and to have sufficient incentive and ability to compete 
head to head with dominant carriers.\19\ Furthermore, we have 
previously found that a single carrier offering a broader competitive 
alternative to the hub carrier's customer proposition at the airport 
can extend the benefits of the low-fare service even in markets without 
LCC or ULCC services by changing passengers' perception of what a fair 
price is for a particular itinerary.\20\ When fares are substantially 
higher, customers tend to look for cheaper alternatives at other 
airlines or nearby airports to avoid paying ``above market'' prices. 
This ``halo effect'' tends to discipline high fares charged by the 
incumbent even in markets where the LCC does not operate, at the 
margin.
---------------------------------------------------------------------------

    \19\ ``Restricting eligibility to these . . . carriers would 
assist new or small non-aligned carriers in defending themselves 
against increasingly dominant competitors, which, with the benefit 
of additional slot interests, could pursue anticompetitive 
strategies such as significantly increasing existing services in any 
new entrant/limited incumbent/low-cost/non-aligned carrier market.'' 
Petition for Waiver of the Terms of the Order Limiting Scheduled 
Operations at LaGuardia Airport, 75 FR 7306, February 18, 2010 at 
7310.
    \20\ See Bennett, Randall D.; Craun, James M. (May 1993). The 
Airline Deregulation Evolution Continues: The Southwest Effect. 
Office of Aviation Analysis, U.S. Department of Transportation; and 
Wittman, Michael D.; Swelbar, William S. (August 2013). Evolving 
Trends of U.S. Domestic Airfares: The Impacts of Competition, 
Consolidation, and Low-Cost Carriers.
---------------------------------------------------------------------------

    For these reasons, the Department proposes to approve, as a package 
to an eligible LCC or ULCC, schedule plans to operate in the 16 peak-
hour runway timings previously approved for operation by Southwest. The 
Department seeks to finalize this process to enable a carrier to begin 
operations as soon as possible, as early as the start of the Winter 
2021/2022 scheduling season. To determine eligibility, the Department 
is proposing several criteria, described below.
    While approving an LCC or ULCC's schedule plans to operate in these 
16 peak-hour runway timings is necessary to address ongoing competition 
issues at EWR, the Department is not concluding by virtue of this 
process that such action will be sufficient to resolve all of those 
issues. In addition, the Department notes that, aside from this 
proceeding to reassign 16 operations historically approved for 
operation by Southwest, usual policies and procedures for Level 2 
schedule facilitation at EWR continue to apply.\21\ The FAA intends to 
provide responses to all pending schedule requests for the Winter 2021/
2022 scheduling season as soon as possible following issuance of this 
notice. Once this reassignment proceeding has been completed, the FAA 
will take action to approve the 16 additional operations for the 
benefit of the awarded carrier.
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    \21\ See e.g., Notice of Submission Deadline for Winter 2021/
2022 Scheduling Season, 86 FR 24428 (May 6, 2021).
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Eligibility and Evaluation Criteria

    In airline transactions involving constrained markets, where market 
concentration is at issue, the Department has found that LCCs and ULCCs 
have the greatest competitive impact upon entry by their ability to 
dramatically lower fares and increase the volume of passengers in a 
market.\22\ In the 2010 United/Continental divestiture, DOJ was 
satisfied that its competition concerns had been addressed by the 
transfer to Southwest, a LCC, of United's EWR slots and other assets.
---------------------------------------------------------------------------

    \22\ See ``Petition for Waiver of the Terms of the Order 
Limiting Scheduled Operations at LaGuardia Airport'', 76 FR 63702, 
October 13, 2011 at 63705, and, Order 2016-11-2 at 21.
---------------------------------------------------------------------------

    Given competitive conditions at Newark--including United's ongoing 
dominance at EWR and the relatively small number of operating 
authorizations being reassigned--the Department tentatively believes 
that continuing to limit eligibility to LCC or ULCC carriers would best 
serve the public interest by providing the

[[Page 52289]]

maximum level of competition with the available public assets.
    In determining which LCC or ULCC would provide the maximum 
competition, the Department tentatively proposes to consider, among 
other factors, carriers' business model and track record to ensure that 
they have the ability and stamina to provide the level of competition 
required. The business model and track record will be determined by 
analysis of revenue, traffic, and schedule data. More specifically, the 
Department will consider:
     Business model and product offering that allow the carrier 
to effectively compete, including the extent to which offering low 
fares to large numbers of travelers is core to its business proposition 
across markets;
     Record of entering and effectively competing in markets 
like those served by dominant carrier(s) at Newark;
     Staying power and track record in highly competitive 
markets, especially vis-[agrave]-vis the specific hub carrier and at 
network carrier hubs and focus cities where the competitive responses 
from incumbent airlines to new entry by price competitors may be 
particularly aggressive; and
     Ability to appeal to a broad cross section of passengers 
by offering a competitive schedule with (at least) minimum levels of 
daily and weekly frequency appropriate for the market(s) at issue, 
along with reasonably competitive onboard products and services and the 
ability to deliver them to customers consistently over time.
    The Department tentatively proposes to evaluate eligible carriers 
based on the above criteria.

Comments Requested

    The Department requests comments on various aspects of the proposed 
process outlined in this notice. Specifically, the Department seeks 
comments on its tentative decision to approve schedule plans, for a 
single carrier, to operate in the 16 peak-hour runway timings as soon 
as possible; its tentative decision to limit eligibility to LCC and 
ULCC carriers; and its proposed evaluation criteria. The Department 
will consider comments outside of the scope of this request as 
nonresponsive. Comments must be filed in this docket and are due not 
later than September 27, 2021.
    Since the issuance of the D.C. Circuit's decision, the Department 
has received letters from interested stakeholders. Any correspondence 
related to the specific issues discussed in this notice have been 
included in the docket.
    The Department will consider all responsive comments received and 
issue a further notice finalizing its decision and soliciting proposals 
from eligible carriers. If no responsive comments are received, the 
Department may proceed directly to issuing a notice requesting 
proposals and providing instruction for doing so.\23\
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    \23\ The Department will solicit proposals on a confidential 
basis given the sensitive commercial information that they are 
likely to contain.

    Issued in Washington, DC, on September 16, 2021.
Carol Annette Petsonk,
Deputy Assistant Secretary for Aviation and International Affairs, U.S. 
Department of Transportation.

Virginia T. Boyle,
Vice President, System Operations Services, Federal Aviation 
Administration.
[FR Doc. 2021-20399 Filed 9-16-21; 4:15 pm]
BILLING CODE 4910-9X-P